Letterkenny Chamber’s first business sentiment survey of 2023 highlights the issues and challenges that businesses are facing but also the optimism and resilience that they demonstrate on a daily basis.
Letterkenny Chamber represents over 290 businesses across Letterkenny and the North West. This survey is the first of three surveys that will be carried out in 2023 in order for the Chamber to better understand the pressures of its membership and feed this back to local and central Government.
The businesses who responded represent a large number of employees and range across the sectors from manufacturing, tradeable services, professional services and retail. This range of sectors is helpful in seeing trends across the sectors and sizes of businesses.
As 2022 ended and we moved into 2023 the economic landscape was looking increasingly uncertain and the cost of living crisis was the primary issue particularly in the domestic market so businesses were concerned as to how the Christmas period would work out.
When asked about their turnover against expectations in the last quarter of 2022, of those surveyed 51% said their turnover was close to expected or normal. Just 22% said there was a reduction between 10-25%. On a very positive note 27% reported that their turnover was better than expected.
Looking ahead at turnover answers are different. 24% say they predict an increase of less than 25%. This has changed significantly from the last survey and reflects more nervousness in the business environment. With acknowledgement of rising costs and the prospect of a recession it is good to see that 29% feel that turnover will remain stable. These predictions show that businesses recognise the pressures but are focused on ensuring their businesses remain profitable.
The challenges businesses have been facing over the last quarter have been well rehearsed and energy costs were cited by nearly half of the respondents as their biggest challenge by far. The other challenges such as recruitment that were reported in 2022 is now ranked lower for most businesses but is still a challenge.
In terms of work force 33% of businesses have hired new staff. The changes to working patterns is discussed regularly and 23% have increased the opportunity for remote working with 10% offering a hybrid solution. We hear from businesses who are trying out different models and as they work through them they are finding the best fit for employees and the business.
Last year increasing costs were seen as a risk factor but this has rocketed from 58.5% in October to 80% this quarter. Within rising costs the biggest challenge by far is energy costs. While there has been some government help with this through the TBESS scheme not as many businesses are availing of this as expected.
Other cost challenges include Labour Costs and the ongoing issues with rising material costs. Increasing costs are by far seen as the biggest risk factor for businesses as cited above, however there is still concern around a domestic recession, inflation and attracting talent.
Interest rates and decarbonisation have slipped down the risk register however it is likely that these will remain as issues over the coming year.
An interesting finding that again is reflected nationally for those companies that are currently recruiting the biggest challenge is availability of staff, while unemployment is at its lowest level for many years there is still a problem in matching recruitment with available opportunities.
Another national issue with recruitment is the effect the housing crisis is having on the labour market, 11.4 % have said that availability of housing is impacting recruitment activity. This s a very serious area of debate nationally and locally and these statistics bring it into reality.
Commenting on the surveys Fionnuala Rabbitt Chamber President said, “We note that the availability of housing is impacting recruitment. This is a national issue that needs to be addressed by government intervention. As we live into our ambitions to grow Donegal and therefore attract investment we need to remove this barrier of availability and cost of housing.”
She continued, “in more positive terms, we were pleased to see that our members and the wider business community did not in general experience a reduction in turnover to the extent we had expected in the last quarter of 2022. The domestic economy in particular remained buoyant. The uncertainty over rising costs is still very much a cause for concern and in particular energy costs are having a huge impact on business turnover and profitability. Our business community has been through some tough years and they are still remining optimistic for the future”.
This is one of three surveys that will be carried out by Letterkenny Chamber in 2023 and each will act as comparison to the others over the year. To view the survey Biz Sent Survey Q1 2023 (1)